Mix and Match: Arriving at the right transport method for your business

By
Christopher Jablonski | &nbsp 2014 | 9 | 5

Plan, source, make, deliver, and return. Accomplishing these tasks at the right price and right time is a critical strategic decision, one that requires a balance of multiple trade-offs. The wealth of options available to supply chain and operations management professionals can be overwhelming at times. Air, sea, rail, road—each has inherent benefits and drawbacks.

As such, uncovering the optimal transportation for a particular business is a process woven into the design of the entire supply chain, from facilities to networks to the vehicles themselves.

Today, most organizations and supply chains do not stick to a single mode of transportation, instead opting for an inter-modal or multimodal approach. The International MultiModal Transport Association defines multimodal transport as “the chain that interconnects different links or modes of transport … into one complete process that ensures an efficient and cost-effective door-to-door movement of goods.” Businesses may choose this method out of necessity—as in the case of a factory with access to a rail station, seaport, or airport only via trucks—but there are other factors involved in selecting an intermodal approach.

“Intermodal/multimodal logistics has tremendous potential to increase supply chain efficiencies,” writes Hemant Bhattbhatt, senior director for Deloitte’s India practice. The Deloitte Research report “Intermodal and Multimodal Logistics” goes on to explain that intermodal logistics is designed to cut transit times, ease congested modes, and reduce logistics cost. In fact, estimates indicate that intermodal logistics has the potential to reduce transit times 40 percent to 50 percent.

Intermodal transport is greatly enabled by the rise of containerization, which uses shipping containers of standard size—now set by the International Organization for Standardization—that can be filled; loaded onto boats, trains, trucks, and even planes; and swapped, depending on the destination and best transport mode available. The containers ultimately are unloaded at the final destination or unpacked and the contents transported by other means.

Shipping containers are used worldwide to transport a variety of solid materials and finished products. Since their advent in the 1950s and ‘60s, shipping containers now transport about 90 percent of global trade goods, writes Charles W. Ebeling in “Evolution of a Box,” adding that more than 18 million containers make more than 200 million trips every year.

Many industry experts say the shipping container has significantly altered the global transportation landscape. In his book The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Marc Levinson explains, “The container itself served as a mobile warehouse, so the traditional costs of storage in transit warehouses fell away. Cargo theft dropped sharply, and claims of damage to goods in transit fell by up to 95 percent.”

E-commerce, especially sites such as Amazon.com, also is changing how customers shop and, in turn, how and when customers demand their goods. Free shipping often is the norm online, with the goal of affordable, same-day delivery within reach. Amazon has even gone so far as to extend Sunday delivery to many parts of the United States.

The company’s CEO, Jeff Bezos, has surprised some by saying that he is serious about using pilotless delivery drones to fly products to customers. These drones are already seeing testing and may soon be performing actual deliveries, Wired reports.

The demand for rapid transport of products and raw materials is higher than ever before, straining capacity, infrastructure, and human resources. Finding the right method and mode for your business requires careful planning, thought, and cost-benefit analysis. It also means recruiting the right people with the right credentials, experience, and talent to manage one of the most important functions in your supply chain.

Comments

Malcolm Gracias
July 10, 2014, 07:50 AM

A little-known pizza chain in Mumbai last week succeeded in making a test-delivery less than 3km away from its outlet in Lower Parel by using a remote-controlled, GPS-enabled drone. The 'customer' was actually a friend of the chain's CEO, so it was technically not a sale, as commercial deliveries by drones are not allowed in India. Yet, in a way, it was a first for a product delivery Amazon has only planned. On May 11, the drone took off from the Lower Parel outlet and, flying at a speed of 30km an hour, manoeuvred its way atop the city's mill district to reach its destination, a high-rise in Worli, in nearly 10 minutes.